Ed Mercier on Risk In Retirement

With Increased volatility In the market, It’s time to rethink the fundamentals

Wealth Solutions Report published an article recently entitled, “Are You Playing Russian Roulette With Clients’ Retirement?” The article starts by laying out the current situation: equities are in flux, life expectancy is increasing, Social Security may not be reliable in the future, and people are worried about outlasting their retirement savings. How do we handle the impending retirement crisis?

To answer the question, Wealth Solutions Report solicited the advice of several industry thought leaders. One of those thought leaders who is quoted throughout the article is our very own President, Ed Mercier. His solution? A contingent deferred annuity.

Ed Mercier, President of RetireOne, says that clients in the decade consisting of the last five years of work and first five years of retirement should “defend against a poor sequence of returns by insuring a portion of their retirement portfolio while at the same time, allocating a higher percentage of their portfolio to equities… the advisor may… cover just a percentage of the portfolio, and increase the client’s risk budget in both the insured portion of the portfolio, and the residual, unprotected portfolio.”

Ed also suggests that annuities, in general, can be a central part of many portfolios: “Annuities transfer risk to insurance companies to provide pension-like streams of income for life that give them the power to spend wisely and confidently.”

With established decumulation strategies like the 4% rule no longer working as expected, it’s hard to argue against that position.